Just recently, Access Bank’s MD announced plans of the bank to lay off staffs and slash salaries amidst the coronavirus crisis. Some other firms and organizations may or is likely to toe this line owing to the harsh economic realities of Covid-19.

It is in light of this that some fundamental questions readily comes to mind viz : Can an employee be declared redundant and laid off? Can an employee who has been laid off due to Covid-19 access his or her pension or gratuity funds? What are the likely effects of declaring an employee redundant, does it affect his/her next job search?

Under Nigerian jurisprudence, the principal legislation governing employment matters is the Labour Act LFN 2004 CAP L1. Section 20(3) of the Act defines redundancy to mean “an involuntary and permanent loss of employment caused by an excess of manpower”. In PEUGEOT AUTOMOBILE NIGERIA LIMITED V. SALIU OJE & ORS.(1997) LPELR-6331(CA) MOHAMMED, J.C.A. Had this to say on redundancy.. “Redundancy in service in my view, is a mode of removing off an employee from service when his post is declared “redundant” by his employee. It is not a voluntary or forced retirement. It is not a dismissal from service. It is not a voluntary or forced resignation. It is not a termination of appointment as is known in public service. It is a form unique only to its procedure where an employee is quietly and lawfully relieved of his post. Such type of removal from office does not, in my view, carry along with it any other benefit except those benefits enumerated by the terms of contract to be payable to an employee declared “redundant.” This was restated in GERAWA OIL MILLS LTD V. ABDULKADIR MANZO BABURA(2018) LPELR-44720(CA). It is therefore, a unique procedure where by an employee is quietly and lawfully relieved of his post. The conditions applicable to redundancy are quite distinct from those applicable to retirement or other conventional modes of determining an employee from service, such as termination, resignation or dismissal.

By virtue of Section 20 of the Labour Act, redundancy terminations within an organization may be regulated contractually. This is where collective bargaining agreement comes in as stated in the case of S.P.D.C.N. Ltd v. Nwawka (2003) 6 NWLR (pt.815) 184. However, reliance on the Act will only cater for employees who fall within the statutory definition of workers. Thus, barring any collective bargaining agreement between the affected employees and the employer which streamlines a procedure for seeking compensation for such disengagement, workers who are administrative staff, management staff and skilled workers may likely not be protected in such instances. For workers who are caught within the web of the Act, the Act expects the employer to be open and transparent about the redundancy process and that such employees be informed of the intention of the employer to declare a redundancy as well as negotiate a disengagement package. The Act further provides that the employer must adopt the principle of last in, first out in discharging such employees or workers. This is in line with the decision of the National Industrial Court in Mr. J. M. J. Asinobi & Ors v Nigerian Breweries Plc, NIC/ EN/05/2009, 18-10-2010. Failure by the employer to observe this obligations can lead to substantial industrial impasse. The employee may opt for court intervention.

On whether redundancy may affect an employees benefit such as gratuity or pension will depend on the terms of the affected employees’ contracts of employment and how long the employees in question have been employed. As far as duration of employment goes, in a recent decision of the National Industrial Court the court applied what it termed the “principle of arithmetical approximation” to the case of an employee whose employment fell a few months short of the qualifying criteria, and rounded up the length of the employee’s contract to the nearest year – with the effect that the employee was entitled to the benefit in question. As a corollary, The Pension Reform Act 2014 specifies the grounds for accessing pension funds by an employee. Under the Act, pension funds of up to 25% can only be assessed by an employee who has voluntarily retired, resigned or has been disengaged from his/her job for up to four months without being able to secure another employment.

Furthermore, an employee who loses his/her job on grounds of redundancy does not carry the stigma of a dismissal or termination. His career or reputation is still intact, he/she only needs to move on in search of work in another organization.

By way of concluding remarks, employers who declare redundancy in their various organizations should abide by the contract of employment of the employees, applicable statutory requirements, collective bargaining agreement with relevant trade unions and other ancillary guidelines. They should also provide compensation packages which may serve as seed capital for the disengaged workers to start up small scale businesses from which others maybe employed.

Okeke Samuel Ogonna is a 4th year Law student of Nnamdi Azikiwe University, Awka okekesam.ogonna@gmail.com